These excerpts from the American Planning Association’s Planning Advisory Service memo touch on hidden long-term costs of industrial-scale solar projects. Many solar developers try to reduce their security deposit for decommissioning by the amount of salvage value they say they’ll get from recycling, but there is little salvage value for used panels, even now. And the amount they do give deposit may not be enough to cover all the future costs of removing the hardware and restoring the land. Such gaps put local governments at risk for paying the cost of decommissioning themselves.
- Decommissioning can cost millions in today’s dollars. The industry strongly asserts that there is a significant salvage value to the solar arrays, but there may or may not be a market to salvage the equipment when removed. Further, the feasibility of realizing salvage value may depend on who removes the equipment—the operator, the tenant, or the landowner (who may not be the same parties as during construction)—as well as when it is removed.
- Providing for adequate security to ensure that financial resources are available to remove the equipment is a significant challenge. Cash escrow is the most reliable security for a locality but is the most expensive for the industry and potentially a financial deal breaker. Insurance bonds or letters of credit seem to be the most acceptable forms of security but can be difficult to enforce as a practical matter. The impact of inflation over decades is difficult to calculate; therefore, the posted financial security to ensure a proper decommissioning should be reevaluated periodically—usually every five years or so. The worst possible outcome for a community (and a farmer or landowner) would be an abandoned utility-scale solar facility with no resources available to pay for its removal.
planning for utility-scale solar energy facilities, pp 5-6
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